Recent Posts

Chinese Vice President
Xi Jinping, slated to be the next leader of the world's most
populous nation, is getting an
earful from U.S. officials over China's shady business
practices. During Xi's first official tour of the U.S. this week,
Sen. John Kerry (D-Mass.) accuseda
Chinese company of bankrupting a U.S. competitor by ransacking
its software. And that's just the tip of the iceberg, alleges
Kerry, implicating China in "cyber-attacks, access-to-market
issues, espionage [and] theft." And, indeed, a flurry of recent
reports indicate that Chinese hackers, backed by the government,
are stealing business secrets from the U.S.

What's going on?

American companies are the victim of an "onslaught of computer
network intrusions that have originated in China," according
to a reportby the U.S. government's
National Counterintelligence Executive (NCE). The report says
China is trying to "build" its economy on U.S. technology,
research and development, and other sensitive forms of
intellectual property.

How is the technology stolen?

Consider the company Kerry cited: Wind-energy experts American
Superconductor. Its biggest client used to be China's Sinovel —
until Sinovel allegedly bribed an American Superconductor
employee to steal his employer's software and give it to Sinovel.
In the case of cyber-attacks, Chinese hackers may leave malware
inside the computer systems of American firms, where the
nefarious programs can go undetected for years, slowly bleeding
companies of information.

Is the Chinese government involved?

Many experts suspect so, though China denies the charges. U.S.
officialsreportedly believe
that a dozen Chinese groups are responsible for the bulk of
cyber-attacks on U.S. companies, and that they receive direction
from the Chinese government or military.

What impact does the theft have on U.S.
companies?

It can be devastating. Some say China is stealing
$400 billionworth of sensitive
information a year. The NCE report cited the case of paint
company Valspar, which lost $20 million, or one-eighth of its
annual profit, after its proprietary information was stolen by a
Chinese rival.

Are there national security concerns?

Definitely. Some hacked companies have contracts with the Defense
Department and other U.S. government agencies, putting classified
information at risk. For nearly a decade,hackers
had accessto
the computer network of telecommunications company Nortel
Networks. If, as suspected, China was behind the breach, it
likely gained valuable insight into the internet and telephone
systems that government agencies, banks, and other businesses
rely on.

What has the U.S. done about this?

Surprisingly little so far. Cyber-security experts are urging the
government to show China that such acts will have serious
repercussions. In the meantime, the NCE says China continues to
be an "aggressive and capable" hacking threat.